Temu and Shien under probe in South Africa over compliance with Consumer Protection Act

South Africa’s National Consumer Commission (NCC) has launched a formal investigation into the activities of e-commerce companies Temu and Shein for failing to comply with the Consumer Protection Act.

The Consumer Protector disclosed the move during a G20 summit in mid-November, titled “Developments in Consumer Protection – Product Safety and Digital Markets.” It explained that the investigation will assess the companies’ marketing style, product safety and their digital market representation operations. 

Per MyBroadBand Report, Executive Head of NCC, Prudence Moilwa, noted that the e-commerce industry has become the commission’s focus area. She said that both Temu and Shein have been notified of the investigation and the need for their compliance. 

“We intend to go into that space and test their compliance fully with the Consumer Protection Act. As a commission, we are signalling to the e-commerce space to say that commission is here to hold you accountable,” Moilwa added. 

As part of its efforts to ensure a balanced e-commerce and retail sector in South Africa, the NCC recently revealed that it is monitoring the impact of Temu’s local warehouse support. Though the NCC said it’s yet to receive any formal complaint against Temu. 

Moilwa pointed out that South Africa’s regulatory framework must keep up with evolving technology for enforcement to reflect the new trends. She added that regulators must be ready to implement the rules as digital markets and e-commerce develop.

“We are not discouraging innovation, but we want it to be done within the lawful framework,” she said. 

While Chinese e-commerce companies are ramping up to expand their presence in South Africa, the NCC is hellbent on making their operations comply with the Consumer Protection Act.

More eyes on Temu and Shein

Aside from investigating their marketing operations and product safety, the country’s consumer protector is also monitoring their use of algorithms. Moilwa said using technology to shape what customers see and buy is one of NCC’s concerns.

As e-commerce companies use public data to monitor customers’ preferences and shape what they see, the commission is concerned about how they get and use this data. According to Moilwa, platforms must be transparent about the data they collect and how their automated systems use the data to target customers.

While she agreed that algorithms help Temu and Shein personalise marketing and improve sales, she noted that customers must have an independent chance to make the decisions that shape their taste and satisfaction.

The strict monitoring comes amid South Africa’s e-commerce surge. With internet penetration hitting 74.7% in 2024 and online shopping projected to soar through 2033, the country’s e-commerce industry is attracting more players.

In its own move to create more balance, Temu, earlier this year, rolled out support for several South African languages, including Zulu.

Read More: Temu adds South African languages to platform in major expansion move.